CAC 40 index continues to trade in a bull market. Here are the next targets

Written by: Stanko Iliev
February 24, 2021
  • European shares advanced this Wednesday, supported by strong growth data in Eurozone
  • If the price above 6,000 points, the next target could be around 6,100 or even 6,200 points
  • If the price falls below 5,600 points, the next target could be around 5,400 points

France’s CAC 40 index continues to trade in a buy zone supported by better than expected economic data in the Eurozone. CAC 40 index is currently trading just a few percentage points below 5,800 resistance, and as long the CAC 40 is above 5,000 points, there is no risk of the trend reversal.

European shares advanced this Wednesday supported by strong growth data in Eurozone, but further turmoil should not be discounted despite this. Concerns over a possible rise in inflation and concerns amid the ongoing pandemic continue to worry investors.

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Some analysts say that it seems that the worst has been avoided, and all industry sectors should benefit from the economic recovery. The EU consumer confidence improved in February, and increasing vaccinations will help the economy to advance even more.

“Investors are becoming more accepting of the fact that as European economies slowly reopen and earnings improve, the current equity valuations could be justified,” said Chris Beauchamp, chief market analyst at IG Group.

Global stock markets are also supported by Jerome Powell’s announcement, who said that interest rates would remain low despite indications of rising inflation. It is also important to mention that the ECB president Christine Lagarde said that the European Central Bank would support the economy as long as the pandemic keeps taking its toll on economic progress.

A pandemic disrupted the global economy in 2020, but policymakers hope for an economic comeback in the second half of this year.

Technical analysis: CAC 40 index continues to trade in a buy zone

CAC 40 index has found strong support above 5,600 points, but it can still not stabilize above 5,800 points, which represents the first resistance level.

Data source: tradingview.com

CAC 40 index continues to trade in a buy zone, and if the price above 6,000 points, the next target could be around 6,100 or even 6,200 points. On the other side, if the price falls below 5,600 points, it would be a firm “sell” signal, and the next target could be around 5,400 points.

 According to the technical analysis rules, 5,000 points represent a powerful support level, and as long the price is above this support, there is no indication of the trend reversal.

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Summary

CAC 40 index continues to trade in a bull market supported by strong growth data in Eurozone. Some analysts say that the worst has been avoided, and all industry sectors should benefit from the economic recovery. Despite this, further turmoil should not be discounted, and if the price of this index falls below 5,600 points, it would be a firm “sell” signal, and the next target could be around 5,400 points.